IRS Provides Tax Info for the Sharing Economy

The Internal Revenue Service has created a new webpage with information to help people who participate in the so-called “sharing economy” get timely tax advice.

The “sharing economy” includes websites and mobile apps such as Airbnb, Uber, Lyft, TaskRabbit and Handy where people can share their homes, hail rides in other people’s cars, offer to perform chores, or get hired to do repairs. Those who do the work are considered entrepreneurs who use the apps to make their services available. However, they generally don’t receive 1099 forms or have taxes withheld from their pay, so they are responsible for taking care of their own taxes.

The IRS’s new Sharing Economy Resource Center provides information to help them meet their tax compliance obligations, including filing requirements, estimated tax payments, self-employment taxes, depreciation and other topics.

“This rapidly evolving area often presents new challenges for people engaged in these economic activities, whether they are renting a room or providing a ride,” said IRS Commissioner John Koskinen in a statement. “The IRS is working to help people in this area by providing them the information and resources they need to file accurate tax returns.”

The resource center stems from a joint initiative between the IRS and the National Taxpayer Advocate. Nina Olson, who heads the Taxpayer Advocate Service, has testified before Congress about the tax implications of the sharing economy (see The Sharing Economy Doesn’t Share Tax Information).

“The IRS has an opportunity to be at the forefront of tax compliance in the emerging and growing area of the sharing economy,” Olson testified in May. “Estimates show that over 2.5 million Americans are earning income through the sharing economy and that number is expected to continue its upward trajectory. Establishing the tax compliance norms for this emerging industry in its infancy will assist the IRS as this segment of taxpayers grows.”

The IRS noted that tax preparation software can help taxpayers deal with the sharing economy, and a trusted tax professional can also assist with many issues. The sharing economy has been a particular focus at this summer's IRS Nationwide Tax Forums, where tax professionals hear directly from the IRS about the latest tax trends and regulations. The forums will continue at various locations through mid-September, featuring sessions with tax experts discussing the implications of the sharing economy for taxpayers.